EB-5 IMMIGRANT INVESTOR PROGRAM
A Path To US Citizenship
EB-5 Immigrant Investor Program
Our Managing Partner, Andrew P. Johnson has been processing EB-5 permanent residency applications for the last 17 years. He has represented applicants applying for the EB-5 visa from numerous countries around the world. The primary issues with EB-5 applicants is proving the legal origin of funds for the EB-5 investment, choosing a Regional Center for the investment, and analyzing the protection clauses and completion guarantees within the private placement memorandum by the developer and other safety measures to protect the applicant’s investment. Mr. Johnson has spoken to EB-5 investors groups in countries abroad such as Istanbul, Turkey Dhaka, Bangladesh; and Tbilisi, Georgia. In 2014, he was invited to speak to United Nations Ambassadors in New York and later to United States Ambassadors in Washington DC about the EB-5 investment program.
How to Prove EB-5 Source of Funds?
The EB-5 Program is a visa program that affords foreign national entrepreneurs, their spouses, and their unmarried children under the age of 21 with an opportunity to obtain permanent residency in the United States while simultaneously stimulating the U.S. economy. The program is administered by U.S. Citizenship and Immigration Services (USCIS) and requires applicants to invest $800,000 in a Targeted Employment Area. A key aspect of the EB-5 application process is the applicant’s ability to establish that the investment funds have no ties to criminal activity. As a result, the EB-5 regulations require the applicant to prove both a “lawful source” of the funds and lawful “path” of the funds, meaning the funds were transferred to the Regional Center by lawful means.
Documents Are Needed to Prove EB-5 Source of Funds?
To prove that the investment capital came from a lawful source, the EB-5 regulations require the applicant to submit:
• Foreign business records;
• Corporate, partnership, and personal tax returns or similar documents that were filed in the preceding 5 years;
• Evidence identifying other sources of capital; or
• Certified copies of court judgments, pending court cases, and administrative proceedings within the past 15 years.
How to Trace EB-5 Funds to their Original Source?
It is important for the applicant to understand that the investment funds must be traced back to their original source. For example, if the funds to be used for the EB-5 investment are in a bank account the applicant will need to submit bank statements showing that the funds are in the account but must also document where the funds were before they were deposited into the bank account. The same rules apply if the EB-5 funds are tied up in real estate investments, stocks, or business accounts.
All investment funds, even if they come from multiple sources, must be traced back in an unbroken chain to the original source. If the original source is a third party such as a bank loan, gift from a friend or relative, or inheritance, the funds need to be connected back to the third party and there must be proof that they were lawfully obtained by the third party.
Proving the original source of the funds often requires the applicant to submit a considerable amount of documentation. This could include such things as bank, retirement, and stock account statements; documents memorializing real estate transactions and property taxes; loan documents showing that the applicant’s loans came from a lawful source; income tax statements; employment contracts and financial statements reflecting salary, earnings, and bonuses; and any documents that establish any type of business income. This list is not exhaustive and the applicant could be required to trace a single set of funds through multiple layers of investment.
For example, suppose the applicant is investing $800,000 to a for Regional Center Project and $400,000 of those funds are in a bank account. Additionally, suppose the $400,000 in the bank account originated as a $200,000 gift from parent and grew over time to $400,000 as the result of several business and stock investments. The applicant must document these funds through each transactional layer beginning with proof that the $200,000 was a lawfully obtained by the parent gifting the funds. Next, the applicant needs to showing how the monies lawfully grew to $400,000 through stock and business investments. Also, keep in mind that this only reflects half of the $800,000 investment. The applicant will also be required to trace the other $400,000 back to its original source.
How to Prove EB-5 Origin of Funds for a Real Estate Transaction?
Finally, there could be situations in which the applicant is unable to provide some of the necessary documentation. Each source of funds will have a separate list of required documents to prove a legal route for USCIS purposes. If an applicant was trying to prove their source of funds through a real estate transaction that was initially paid through the investor’s income, the applicant would need to provide bank statements reflecting the deposits of their salary. The secondary evidence may be tax payments or an employment contract. These documents would help prove that the origin of the funds were legally earned prior to the purchase of the real estate.
For a Real Estate purchase, the documents needed to help prove origin of funds would include a purchase agreement, property ownership certificate or deed, and bank statements showing payment for that property. In some countries standard real estate documents are not possible and declarations would need to be prepared in order to supplement the lack of evidence.